I am having difficulty paying for a car I purchased on credit. What are my options?

I purchased a car on credit & now find it difficult to pay? I paid £1000 and have £9000 remaining? What do I do? What options does Shariah give me?

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In principle, a transaction cannot be unilaterally cancelled. To rescind a purchase, both parties have to mutually agree to terminate the transaction.

You have the following possibilities in your situation:

1) Ask for the transaction to be cancelled and reversed. This is called iqālah in Fiqh. You will give back the car forfeiting all ownership rights and the seller will return to you the £1000.

2) Ask for a grace period. Try your best to gather funds to meet your obligations. To convince the seller to grant you a grace period, you may securitise the transaction in the following ways:

a) Furnish a collateral (rahn) as a security with the grace period. This will grant assurance to the seller that he will get his payment. Failure to pay from your side or in the event of further default, the seller will have the right to sell the collateral and retrieve his funds therewith.

b) Provide a guarantor (kafīl) to the seller. He will provide assurance and will also be liable to get the payment to the seller. The guarantor cannot charge a fee.

c) Transfer your debt to somebody else who can pay on spot. Thereafter, arrange a time frame with the transferee to pay off the debt. This is classically known as ḥawālah. A fee cannot be charged for this service.